Pension rip offs

[Horace Cope]

can you move them from there easily enough?

Yes I believe you can transfer it from there at any time

The main danger with Pension Bee is you don’t know what you are giving up if you just blindly transfer them to “consolidate”. You are taking on the responsibility yourself. If you are savvy enough to understand the difference in charges, lifestyling strategies used within some of your previous workplace pensions, guaranteed annuity rates, fund performance etc then fair enough. I’ve also seen some crackerjacks who’ve got CETV’s from their final salary plans and tried to move that into Pension Bee without advice only to be surprised when they are told they can’t.

That’s usually why it’s better to seek advice. The main reason people don’t is they are reticent to pay for it. There was a recent study by the FCA showing how much better off clients were who took advice vs those that didn’t and the results are quite staggering.

Many people just take the annuity on offer because they don’t want to pay an adviser for example. A significant number of people don’t understand their workplace arrangement derisks as they get older. This massively restricts growth and is designed to really purchase an annuity which of course hardly anyone does now. It’s a minefield if you don’t know what you invest in, why you invest that way and how it’s going to allow you to meet your goals and objectives.

That's a good point. In my case the pension schemes had been wound up and it made more sense to merge them with a provider that lets me start contributing again should I wish

 

[Tuono]

Yes I believe you can transfer it from there at any time



That's a good point. In my case the pension schemes had been wound up and it made more sense to merge them with a provider that lets me start contributing again should I wish

Same her. One was dormant and with the other I couldn't increase contributions.

 

[Copacabana]

Good I think , many companies just match employee contributions

in my mind it doesn't matter how much your putting in as much as where its being invested. Just been talking to a work colleague never met him before in my life got talking about the company pension/savings scheme. told him this past year its was showing a +40% gain and for the past 10 years or so its been doing +20% per year at least. OMG you should have seen his face when he told me he averages about 1%. Initially you could tell he thought I was bullshitting him but eventually it turns out his whole fund is in bonds (zero equities).

 

[timeforheroes1]

i dont know why people get hung up on fee's advisors and companies charge, if the net return is acceptable to you then does it really matter in the grand scheme of things?

 

[Copacabana]

I'm another one in this situation.

The choices are fairly bewildering as I know the square root of chuff all about pension consolidation but have 3 to figure out what to do

I'm in the same place and have recently spoken to an IFA and arranged to put a few of my pots with them, equivalent to about a third of the overall portfolio but hate paying the fees for it!
However, since doing it I've seen videos on YouTube by this lad.

There's about four or five he's done on pensions and I'd highly recommend watching them all. The Vanguard lifestyle pension ones in particular caught my eye. They appear easy, and free, to transfer all your pots in and only have a 0.15% management fee capped at £375 / year which is a big saving on what I've paid and the funds look as if they perform really well in comparison to how my current pots have been doing over the last five years.
I think going forward over the next few years I'll transfer other pots to Vanguard or similar and leave the initial ones with the IFA and see how each perform. As part of my fee with the IFA I get regular updates and reviews so whatever advice I get from them I can use to review the Vanguard pot but without the IFA getting their high percentage slice off that pot as well. I'll see how the two pots perform against each other before deciding on which one to drop both into before I retire.
For young'uns just starting out the YouTube lad puts up a great example.
A lass starts putting money into a pension at twenty, she puts in say £5000 a year with her contributions, employer and tax contributions. She does this for ten years then stops and has contributions of £50k. A lad starts at 30 and also puts in £5k a year but does it until he's 65 and has contributions of £175k overall. When the final two pots are compared the lass has far more in hers despite contributing significantly less just because she started early and the compound interest on her pot has longer to grow.

Question, where is your IFA investing the money?

 

[Deleted member 30053]

i dont know why people get hung up on fee's advisors and companies charge, if the net return is acceptable to you then does it really matter in the grand scheme of things?

Sadly some people would rather make 3% per annum without paying an adviser than make 8% per annum by paying one. One imbecile actually said that to me this year. He’d made 3% when everyone else had made 20% (which a lot have over the last 12 months) but he preferred the 3% return as he didn’t have to pay anyone.

 

[Billy Fish]

Question, where is your IFA investing the money?

Not sure off the top of my head as it's all filed away now but iirc it's balanced uk and overseas equity accounting for about 75-80% then 15-20% bonds and 5% ish cash

 

[Patch]

She was a deputy manager working for Wandsworth Council, loads a money. I think she gets a £6,000 lump sum anarl, payable in about 6 months time when she hits 62. Just checked with her, it'll be about £6,000 depending on how much she takes as a lump sum at the start, the bigger lump sum she takes the less she gets anually.

I wouldn't plan any holidays on the basis of those numbers. The lump sum is "up to" 25% of the fund value. If £6k does represent 25% then the total fund would be worth £24k (which seems reasonable(ish) for 3 years of contributions); there is no way that will get £6k p.a. Assuming it's index linked, that would cost more like £200k which is one hell of a pension contribution to achieve in 3 years.

 

[Copacabana]

Not sure off the top of my head as it's all filed away now but iirc it's balanced uk and overseas equity accounting for about 75-80% then 15-20% bonds and 5% ish cash

oh well at least you have some idea where its invested.

 

[Tuono]

I wouldn't plan any holidays on the basis of those numbers. The lump sum is "up to" 25% of the fund value. If £6k does represent 25% then the total fund would be worth £24k (which seems reasonable(ish) for 3 years of contributions); there is no way that will get £6k p.a. Assuming it's index linked, that would cost more like £200k which is one hell of a pension contribution to achieve in 3 years.

Well to update that post. She didn't take a lump sum she just took the pension. I've no idea how they work it out but she left Wandsworth in 2000 so I suppose the contributions she made from 1997-2000 must have accrued interest of some kind in the intervening 20 years. Everyone I know with a public sector pension seem to get a lot more out than they ever put in. I've mentioned before one of my sisters could have retired on a NHS pension aged 52 or 53, her pension would have been £23,000 pa plus a lump sum of £73,000 or £74,000. Any idea how much she would have needed to pay into a private pension to get those benefits from that age?

 

[42]

I wouldn't plan any holidays on the basis of those numbers. The lump sum is "up to" 25% of the fund value. If £6k does represent 25% then the total fund would be worth £24k (which seems reasonable(ish) for 3 years of contributions); there is no way that will get £6k p.a. Assuming it's index linked, that would cost more like £200k which is one hell of a pension contribution to achieve in 3 years.

It'll be a DB pension, there isn't a fund.

Lumpers were paid relative to salary & time served, but got changed.
You can commute some of your pension into a lumper. £6k would represent giving up £500 of annual pension

 

[Patch]

It'll be a DB pension, there isn't a fund.

Lumpers were paid relative to salary & time served, but got changed.
You can commute some of your pension into a lumper. £6k would represent giving up £500 of annual pension

I know it's DB, but that is one hell of an outcome; I was making a DC comparison.. Scale it up to 40 years of service and the pension would be worth c. £80k p.a. An index linked equivalent annuity would set you back north of £2m.

 

[42]

I know it's DB, but that is one hell of an outcome; I was making a DC comparison.. Scale it up to 40 years of service and the pension would be worth c. £80k p.a. An index linked equivalent annuity would set you back north of £2m.

You can't really make that comparison as you're scaling up from an irrelevant lump sum

You can commute 25% of you're annual pension into a tax free lumper, but there's additional lumper on top of that which was given prior to the reforms in mid 2000's which has nothing to do with 25%

To get an £80k pension after 40 years, you'd need to be earning £120k-£150k

 

[Patch]

Well to update that post. She didn't take a lump sum she just took the pension. I've no idea how they work it out but she left Wandsworth in 2000 so I suppose the contributions she made from 1997-2000 must have accrued interest of some kind in the intervening 20 years. Everyone I know with a public sector pension seem to get a lot more out than they ever put in. I've mentioned before one of my sisters could have retired on a NHS pension aged 52 or 53, her pension would have been £23,000 pa plus a lump sum of £73,000 or £74,000. Any idea how much she would have needed to pay into a private pension to get those benefits from that age?

Indexed annuities cost an effing fortune. I'll let one of the professionals give a more accurate figure but I reckon you'd be looking at needing about £800k for that pension. There are other ways of taking a pot but like for like, I reckon that's what it would cost.

You can't really make that comparison as you're scaling up from an irrelevant lump sum

You can commute 25% of you're annual pension into a tax free lumper, but there's additional lumper on top of that which was given prior to the reforms in mid 2000's which has nothing to do with 25%

To get an £80k pension after 40 years, you'd need to be earning £120k-£150k

The post I quoted was suggesting £6k p.a. on three years of service; there is literally nothing else to go on. I'm completely ignoring the lump sum and suggesting that's what an annuity would cost a man on the street if he wanted that level of income.

 

[42]

Indexed annuities cost an effing fortune. I'll let one of the professionals give a more accurate figure but I reckon you'd be looking at needing about £800k for that pension. There are other ways of taking a pot but like for like, I reckon that's what it would cost.


The post I quoted was suggesting £6k p.a. on three years of service; there is literally nothing else to go on. I'm completely ignoring the lump sum and suggesting that's what an annuity would cost a man on the street if he wanted that level of income.

97-00 could be 4 years.

£40k salary for 4 years would give a pension of £2k & £6k lump sum.
Can then covert 25% of the £2k & have a £1500 pension & £12k lump sum..

 

[Patch]

97-00 could be 4 years.

£40k salary for 4 years would give a pension of £2k & £6k lump sum.
Can then covert 25% of the £2k & have a £1500 pension & £12k lump sum..

The lad did say £6k p.a. based on 3 years. Anyway, it seems like a hell of a result. @Tuono, if those numbers are right then your missus sounds like a keeper (based purely on her financial good fortune... anything else is a bonus).

 

[Lo Ursem]

Maybe. Maybe not.

The majority of people with private pensions probably cannot afford to pay enough in or are not getting tax relief at 40% to make it worthwhile.
Any extra private pension would otherwise reduce any potential state pension benefits.
Many pensioners with the basic state pension and no other source of income will get all if not most of the rent paid for them and will be liable for minimal council tax liability.
Add in Pension Credit which provides extra money up to £177 per week as well as free dental treatment and extra help with fuel bills then it becomes apparent that for a significant number of pensioners a private pension is not essential for a relatively comfortable retirement.
Unless if course a round the world cruise is on a bucket list but then the way things are going with global warming that may be off the agenda soon.

 

[Tuono]

The lad did say £6k p.a. based on 3 years. Anyway, it seems like a hell of a result. @Tuono, if those numbers are right then your missus sounds like a keeper (based purely on her financial good fortune... anything else is a bonus).

Had a word with her last night and apparently she was deputy manager for 3 years but before that she did 2-3 years as a normal care worker so that would have also counted towards her pension. She was earning more than me when she was a deputy manager so £35,000+ I'd say. I don't really get involved in her pensions because she earned them and they're hers to spunk on a static caravan she owns. When I retire in about 3 years time then I suppose we'll pool our pensions and live according to what we have coming in. Downsizing will also be on the cards as we live in a 3 bed detached house in a nice area that is boring as feck. The only fly in the ointment is her health, I'm not sure she'll be here in 3 years time to be honest.

 

[buster]

Sadly some people would rather make 3% per annum without paying an adviser than make 8% per annum by paying one. One imbecile actually said that to me this year. He’d made 3% when everyone else had made 20% (which a lot have over the last 12 months) but he preferred the 3% return as he didn’t have to pay anyone.

Did you get any business off him then ?

 

[Mackem00]

Well to update that post. She didn't take a lump sum she just took the pension. I've no idea how they work it out but she left Wandsworth in 2000 so I suppose the contributions she made from 1997-2000 must have accrued interest of some kind in the intervening 20 years. Everyone I know with a public sector pension seem to get a lot more out than they ever put in. I've mentioned before one of my sisters could have retired on a NHS pension aged 52 or 53, her pension would have been £23,000 pa plus a lump sum of £73,000 or £74,000. Any idea how much she would have needed to pay into a private pension to get those benefits from that age?

She'll have been paying in atleast 12.5% of her salary into it (which must have been pretty substantial) but after that no idea. She's the last of the lucky ones. Hasn't even maxed out either.

Edit: ignore this shite. I assumed it was an NHS pension.